I Won't See You In Court (Business Platinum Ventures)

Saturday, May 1, 2004

A supplier and a customer have been doing business together for 15 years. Suddenly, there’s a discrepancy over a major contract. The discussions start friendly but grow increasingly strained.

The problem has reached an impasse. Nobody relishes the cost, time, acrimony, and bad publicity of going to court, but what alternatives do they have?

Plenty, say advocates of mediation and arbitration,methods of dispute resolution that have steadily been gaining popularity and acceptance in recent years.

“In the last decade or so, there’s been a tremendous growth in mediated negotiation and other problem-solving methods to solve disputes out of court,” says Tom Stipanowich, president and CEO of the CPR Institute for Dispute Resolution.

Walter G. Gans, a professional arbitrator and mediator,says dispute resolution offers several advantages over going to court, including time and cost savings, greater flexibility,and a generally lower level of confrontation.

Dispute resolution, if properly structured, seeks a resolution rather than a victor, advocates say. Whereas a court battle often leaves opponents bitter and angry, with dispute resolution, “even though they have a dispute, they can continue to do business together,” says Kersten Norlin, vice president for corporate communications for the American Arbitration Association.

There are other advantages. Court cases are public procedures,while alternative dispute resolutions are private arrangements where all details, including the settlement, may be protected.

Dispute resolution has also assumed an important place in the global economy. While businesses from different countries are usually wary about becoming entangled in their opponent’s home court system, dispute resolution offers a neutral ground.

Even though opposing parties may agree at any point during a dispute to seek mediation or arbitration, experts agree that the sooner you decide upon that course, the better. Some companies work clauses into contracts with other businesses or with employees, calling for dispute resolution in case of a problem.

There are few legal guidelines governing dispute resolution. The flexibility this allows is one of the beauties of the system, but it’s also one of the challenges, experts say. Since almost anyone can hang out a shingle and call himself a professional mediator, make sure you work through an established organization or with a well-credentialed neutral.

Dispute resolution is not suited to every conflict. In matters involving criminal activity, courts are still the way to go, experts say. Also, you may wish to establish a legal precedent in a case. It’s important to note that decisions in dispute-resolution cases are not recognized by the courts. If you wind up in court on a similar matter, you won’t be able to cite past victories.

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In addition to mediation and arbitration, approaches that have been introduced include “mini trials,” in which parties exchange information in a nonbinding and confidential format. The process seeks to keep the focus on the controversy by eliminating extraneous issues that sometimes creep into cases. The construction industry has also used an innovative approach called “partnering,”in which all parties involved in a project meet before the project begins,in order to foresee and avoid disputes.

The American Arbitration Association, based in New York, has a Web site (www.adr.org) where you will find a host of information.

The CPR Institute for Dispute Resolution, a nonprofit alliance founded in 1979 and also based in New York, is sponsored by 500 leading corporations, law firms, and academic institutions. President Tom Stipanowich says the group is working to involve more small and midsize businesses. The group offers a wide range of publications and training programs. Visit www.cpradr.org.

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